24 Sep 2018

Following publication of the 'agreed' text of the draft Withdrawal Agreement (the "Draft Text") between the United Kingdom ("UK") and the remainder of the European Union ("EU") on 19 March 2018, our intellectual property ("IP") team has produced a suite of briefings on key aspects of the likely implications of Brexit for IP rights and systems across the EU, to inform our clients what changes they will need to consider making to their existing IP strategies and protocols to continue dealing in post-Brexit UK and Europe. The topic of this note is how Brexit will impact the protection of trade marks. 

This note has also been updated following publication by the UK Government on 24 September 2018 of its guidance to businesses, organisations and individuals on the protection of trade marks in the event of a ‘No Deal’ Brexit (“No Deal Guidance”).

EU trade mark system 

For the last 22 years, the EU registered trade mark ("EUTM") system has allowed applicants to obtain a single trade mark registration covering all EU Member States, rather than having to seek national protection through separate intellectual property offices. As multi-jurisdictional, unitary IP rights, the scope of protection of EUTMs is indivisible. Their effect is tied directly to what constitutes the single market of the EU, underpinning the development of "Fortress Europe" to allow for the free movement of goods,1 and giving broader protection for rights-holders by providing a basis for seeking and being granted EU-wide injunctions against infringers. 

The EUTM system has also influenced and led to the harmonisation of national trade mark laws and registration procedures across the EU. This has promoted consistent application and interpretation of national trade mark registrations (as well as EUTMs), giving certainty to rights-holders and consumers. 

Although the specific impact of Brexit on EUTMs remains uncertain, the Draft Text clarifies where key principles which will underpin trade mark law going forward have been agreed. 

Assuming the Draft Text forms the basis of the final agreement, the UK will cease to be an EU Member State at the end of the two year period (on 29 March 2019), but this will be immediately followed by a transitional period that will result in the UK effectively staying within the single market and customs union until 31 December 2020 (the "Transitional Period").

Continued protection for pre-existing EUTMs

Owners of EUTMs registered before the end of the Transitional Period shall "…without any re-examination,2  become the holder of a comparable registered and enforceable intellectual property right in the United Kingdom, as provided by the law of the United Kingdom…".3The Draft Text continues: "the holder of a European Union trade mark … shall become the holder of a trade mark in the United Kingdom, consisting of the same sign, for the same goods and services."4 The "comparable UK right" will have the same filing or priority date as the EUTM, the same renewal date and, where applicable, the seniority of trade mark in the UK.5  

Whilst continued protection of EUTMs in the UK is agreed, the mechanism for implementing this protection is not. In terms of practical steps required, the UK has so far not agreed with the remaining EU Member States that the registration of a corresponding UK right: 

  • will be free of charge 
  • will not require an application or administrative procedure on the part of the EUTM holder
  • will not necessitate the right-holder requiring a correspondence address in the UK.6

However, the No Deal Guidance suggests that, in such circumstances, the process for securing a new UK right would incur “minimal administrative burden”, stating that EUTM owners would be notified that a new UK right has been granted, and those not wishing to be granted a new UK right would then be able to ‘opt out’. Despite public statements that the grant of a UK right may be free of charge to right-holders,7 confirmation of this is notably absent from the No Deal Guidance. Regarding a correspondence address, the current rules stipulate that applicants for UK trade marks must supply an address for service which is within the European Economic Area, and the No Deal Guidance suggests no immediate changes would be made to this requirement.

Practical tip: As the UK will recognise a comparable registered right for existing EUTMs, it may be overly cautious for the owner of a registered EUTM to apply for a corresponding UK trade mark. However, as the exact process for continued protection has not been agreed, including crucially whether the corresponding UK right will be granted free of charge, applicants may wish to seize the opportunity to apply now, before the UK Intellectual Property Office ("UK IPO") has the chance to increase fees. See also “Priority for pending applications” below.

Ongoing invalidity and revocation actions

The Draft Text states that where an EUTM is "declared invalid or revoked as a result of an administrative or judicial procedure that was ongoing on the last day of the transition period", the corresponding UK trade mark will also be declared invalid or revoked unless the grounds for invalidity or revocation do not apply in the UK.8 Therefore, where an EUTM is invalidated or revoked in this way, the UK will not be obliged to invalidate or revoke the comparable UK right if the grounds do not apply in the UK. An example of this may be descriptive marks in foreign languages - that may not be descriptive in English.

This suggests that circumstances will occur where the "comparable UK right" is not entirely dependent upon the pre-existing EUTM, but will have a standing of its own. Unlike the current position where EUTMs are unitary and would be invalidated or revoked with effect in all Member States, the comparable UK right (which has only been granted by virtue of the right-holder's EUTM) could survive the EUTM's invalidation or revocation. Rights-holders may therefore be in a better position, as it could extend the holder's rights in the UK beyond the rights which would be granted by virtue of the EUTM, whilst preserving the original filing/priority date. 

Although this has been agreed, it will be interesting to see how the UK IPO deals with the potential administrative burden of dealing with assessments on whether grounds for revocation or invalid apply in each case. 

Practical tip: Rights-holders or applicants with EUTMs in administrative or judicial procedures facing a declaration of invalidity or revocation, at any time before the end of the Transitional Period, should consider gathering evidence demonstrating specifically why the grounds might not apply in the UK, particularly if the UK is a key market, as this may preserve some registered rights, even if an adverse decision is received on the EUTM. 

It is worth noting that the No Deal Guidance also confirms the independent nature of the new UK right, clarifying that such rights would be “treated as if it had been applied for and registered under UK law”, despite arising from ownership of a pre-existing EUTM. This would mean, amongst other things, that the UK right:

  • would be subject to renewal in the UK
  • could be licensed and assigned independently of the EUTM
  • could form the basis for actions at the UK IPO’s Tribunal and in the UK courts.

In this regard, the No Deal Guidance also suggests that provision would be made for cases involving EUTMs pending before the UK courts when the UK leaves the EU. Strategy in ongoing, pending or contemplated litigation would also require careful consideration, given that as of 30 March 2019, pan-EU injunctions cannot be granted by the UK courts and, where granted by an EU court, would not apply to the UK.  

Genuine use 

It has been agreed that the newly created UK right will not be liable to revocation on the ground that the EUTM had not been put into genuine use in the UK before the end of the Transitional Period9 - but the Draft Text does not elaborate further. It appears likely that the comparable UK right will be given a new non-use grace period. However, it is unknown for how long the non-use period will last (would the usual five year period be appropriate, or too long?), or when such period will begin (on 1 January 2021 once the Transitional Period has expired, or on the date when the comparable UK right is deemed granted by the UK IPO?). 

As the Draft Text's aim is to set out arrangements between the UK and the remaining Member States, there are no provisions dealing expressly with the treatment of EUTMs after the Transitional Period. Although the European Intellectual Property Office ("EU IPO") confirmed in January 2018 that use of an EUTM in the UK would qualify as use in the EU, it is unknown whether this will apply after the expiry of the Transitional Period.

Practical tip: As general advice, it is prudent to keep dated examples of use in all territories and jurisdictions should issues of non-use arise. It may be more important going forward to keep separate records for the UK and EU. 

It is unclear whether other grounds for revocation will be affected, for example, will parties be able to rely on evidence from the UK (for EUTMs) or Member States of the EU (for UK) in evidencing whether a trade mark:

  • has become a common name in the trade
  • is descriptive and/or devoid of distinctive character
  • is contrary to public policy or morality? 

Reputation

Where an EUTM owner wishes to rely on reputation in opposition or infringement proceedings following the grant of its comparable UK right, it will be able to exercise equivalent rights in the UK:

  • on the basis of its reputation in the EU at the date of the end of the Transitional Period (even if such use was not in the UK)
  • on the continuing reputation based on use in the after the Transitional Period.10 

As a result, any historical reputation in the EU will become less relevant in UK proceedings as time goes on. 

No comment has been made on whether EUTM owners will be able to rely on UK reputation acquired before the end of the Transitional Period for such purposes in the EU, in actions taken during or after the Transitional Period.

Priority for pending applications

EUTM applications pending at the end of the Transitional Period will not automatically be transformed into a comparable UK right. Instead, applicants will have a right to file an application in the UK "for the same trade mark in respect of goods and services which are identical with or contained within those for which the application has been filed" within a nine month period from the end of the Transitional Period, with the same filing and priority date as the corresponding EUTM application.11 The No Deal Guidance confirms these applications would be under the normal application process for trade marks. However, unlike for registered EUTMs, the application will be filed directly with the UK IPO and will be examined by the UK IPO. Therefore there is no guarantee that the application will be accepted, even if the corresponding EUTM application has been or is accepted by the EU IPO. 

Practical tip: The No Deal Guidance confirms that applicants would be required to cover the costs of filing a new UK application, in accordance with the UK fee structure. Advance consideration should to be given to filing both EU and UK applications where it seems unlikely the EUTM will be granted before 30 March 2019, as the UK fee structure may have changed by the end of this period. 

International registrations designating the EU

It is agreed that the UK shall take measures to ensure that holders of International trade mark registrations pursuant to the Madrid system ("IRs"), before the end of the Transitional Period, enjoy protection in the UK for those IRs.12 Unlike for EUTMs, the EU has not suggested the means by which protection of such will be achieved, presumably because it involves an organisation, the World Intellectual Property Organization ("WIPO"), which is not party to discussions.

Accordingly, it would seem that the UK would have two choices to implement continued protection for IRs:

  1. With WIPO's cooperation, for each IR designating the EU, the UK would be added as a designated country of protection (where the UK is not already so listed). Although potentially the easier option, this would impose an administrative burden upon WIPO which it may not be prepared to take as it has had no input in the negotiations between the UK and the EU. 
  2. Alternatively, the UK could treat IRs designating the EU in a fashion similar as for EUTMs – by granting a corresponding UK right, for the same trade mark protected by the IR. If the UK were to pursue this option, this would mean that the administrative burden would fall upon the UK IPO (rather than WIPO), and the issues set out above in respect of EUTMs would apply. 

Unfortunately, the No Deal Guidance provides no more clarity on this topic, simply stating that “The government will work, including with [WIPO], to provide continued protection in the UK after March 2019 of trade marks… filed through the Madrid [system]… which designate the EU”, including practical solutions for pending applications. 

Practical tip: As the UK has agreed that measures will be taken to ensure IR holders enjoy protection in the UK for granted IRs, applying for an additional UK trade mark may be overly cautious. 

Practical tip – pending applications: It is unclear whether an applicant for an IR will have the same right as an EUTM applicant to file an application in the UK for the same mark to preserve the filing and priority date. The IR registration process can take much longer than the EUTM process, so it is likely there will be a greater number of IR applications affected by any transitional provisions. 

See further in the suite of briefing notes for guidance on the exhaustion of rights.


[1] See our briefing note on "Brexit… and exhaustion of rights" for more on this topic

[2] The "corresponding UK right" will not be subject to any re -examination by the UK Intellectual Property Office ("UK IPO") 

[3] Article 50(1) of the Draft Text

[4] Ibid

[5] Article 50(4) and (5)(a) of the Draft Text

[6] Article 51(1), (2) and (4) of the Draft Text

[7] A note circulated with the No Deal Guidance suggests that the new UK rights would be created free of charge, but “Subject to agreement of the Withdrawal Agreement” rather than in a ‘no deal’ scenario

[8] Article 50(3) of the Draft Text

[9] Article 50(5)(b) of the Draft Text

[10] Article 50(5)(c) of the Draft Text

[11] Article 55(1) of the Draft Text

[12] Article 52 of the Draft Text

How did we arrive at Brexit? 

A truly unprecedented process began on 29 March 2017, when the United Kingdom invoked Article 50 of the Treaty for the Functioning of the European Union ("TFEU"), in response to the referendum held in June 2016. 

Never before had a Member State left the European Union. 

Since it joined in January 1973, the UK has operated under the fundamental principle that European laws are supreme and have precedence over, if not direct effect on, national law. Brexit therefore presents, both for the UK and the EU, an enormous legislative challenge in that it is estimated that the accumulated body of European law and rules comprises over 12,000 regulations on top of other forms of legislation.

In few areas will Brexit be more disruptive than for IP rights. There has been considerable harmonisation of IP rights and remedies across the 28 Member States. Moreover, European wide trade mark and design registrations have been created, the first truly multinational unitary property rights. 

Brexit will change all of this. 

At the time of publication, many questions remain about the possible impact of Brexit whether in the sphere of IP or otherwise. Certainly, before the publication of the 'agreed' text of the Draft Text on 19 March 2018, it had not been realistic to provide much by way of constructive advice and detailed guidance. 

Following its release, the IP team of Womble Bond Dickinson analysed the published Draft Text in order to produce this suite of briefing notes on key aspects of the likely implications of Brexit for IP rights and systems across the European Union, to inform our clients on what they will need to consider changing in their existing IP strategies and protocols to continue dealing in post-Brexit UK and Europe. 

It should be noted the Draft Text confirms the intention of the signatories that, although the UK will leave the EU on 29 March 2019, there will be an extensive transition period lasting until 31 December 2020.